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1)
This is a very stereotypical gender-role kind of question, but let’s go with it.
A man and a woman are trying to decide where to go on a date. The woman prefers ballet; the man prefers going to a football game. The first value is the woman’s payoff, the second is man’s.
MAN
Football Ballet
WOMAN Football 1, 4 0, 0
Ballet 2, 2 4, 1
Answer the following two questions and explain!
(a) What is the solution to this one-shot game?
(b) Suppose the couple is planning many dates over a period of time.
What other arrangements can make both parties better off?
2)
As a budding entrepreneur, you have purchased a small bagel shop. You have engaged in a market study to categorize your customers’ willingness to pay for a meal (coffee+bagel) into 8 equal sized groups: ($5.00, $4.50, $4.00, $3.50, $3.00, $2.50, $2.00, $1.50). All of your costs are fixed except labor and materials, which cost $2.25 per meal sold.
(a) What price should you charge for a meal? (Enter dollars and cents, separated by a decimal point; don’t include the “$”).
(b) Suppose your market research tells you that the four lowest value groups are all students. Should you offer a student discount? If so, how much of a discount? (Enter dollars and cents, separated by a decimal point; don’t include the “$”).
